Bank of Russia hopes for recovery economic growth

The Central Bank of the Russian Federation predicts “recovery growth of the Russian economy” in 2021 by 3-4%. This is stated in a press release following a meeting of the regulator’s board of directors.

On Friday, the Bank of Russia kept the key rate at the same level of 4.25% per annum. Thus, it is holding (following the results of the fourth meeting in a row) at a historic low, to which it was dropped on July 24, 2020.

As stated by the Central Bank, the country’s GDP fell by 3.1% last year, and “this is less than the Bank of Russia expected earlier.” “The economic recovery, according to the Bank of Russia estimates, continued in the IV quarter of 2020. The deterioration of the epidemic situation in Russia and in the world has had a much less significant deterrent effect on the economy than expected. This is due to the pinpoint nature of restrictive measures and the significant adaptation of citizens and enterprises to new conditions. In the IV quarter of 2020, real incomes of the population continued to recover and unemployment began to decline, ”the regulator emphasizes.

At the same time, he points out that “operational indicators of economic activity indicate a continuation of economic recovery in early 2021.” “The pace of recovery will be supported by an improvement in consumer and business sentiment against the backdrop of a partial lifting of restrictive measures and vaccination of the population against coronavirus,” the Central Bank believes.

“The Bank of Russia predicts the recovery growth of the Russian economy in 2021 by 3-4%. However, the magnitude of recovery in individual industries may still vary greatly. In 2022–2023, according to the Bank of Russia forecast, GDP will grow by 2.5–3.5 and 2.0–3.0%, respectively. The medium-term trajectory of economic growth will be significantly influenced by the dynamics of the coronavirus pandemic in Russia and in the world, the nature of the recovery in private demand amid a possible change in the behavior of the population and business, as well as the trajectory of budget consolidation. Soft monetary policy will continue to support the economy throughout 2021, ”the Central Bank sums up.

Recall that the Russian economy in February-March 2020 was under the powerful influence of two negative factors at once – the rapid spread of the COVID-19 coronavirus infection pandemic and its detrimental effect on the global economy, as well as the collapse in oil prices. Against this background, the ruble has depreciated significantly against the dollar and the euro. In response to the situation, the government and the Bank of Russia have consistently introduced several packages of measures to support the economy and citizens.

On June 2, Prime Minister Mikhail Mishustin presented to Russian President Vladimir Putin the first version of a national plan to restore the Russian economy in 2020-2021. On June 19, the head of state was sent a revised draft of the national plan, and on September 23, the government approved the final version of the document (worth about 6.4 trillion rubles).

In November, Putin said that the volume of anti-crisis support from the budget during the epidemic amounted to 4.5% of GDP in Russia, which helped ease the situation in the economy and go through a difficult period without irreversible losses.

We also add that at the end of 2020, the Russian economy showed a decline of 3.1% compared to 2019, when it grew by 2%. This is the first assessment of the Federal State Statistics Service. It turned out to be better than the expectations of the Ministry of Economic Development and the Central Bank of the Russian Federation. The Ministry of Economic Development predicted a decline in the economy at the end of 2020 by 3.8%, and the financial regulator – by 4-5%. Nevertheless, the decline in Russian GDP by 3.1% is the strongest since 2009 (then the economy lost 7.8%).

On January 26, the International Monetary Fund predicted that the Russian economy will add 3% this year and will grow by 3.9% next year.

Earlier in January, the international rating agency Moody’s shared its expectations that Russian GDP will grow by 2.3% this year after falling by 4.2% last year.

Prior to that, on December 25, the head of Sberbank, German Gref, in an interview with the Russia 24 TV channel, suggested that in 2021 the annual inflation in the Russian Federation would be below 4%, and the economic growth rate would be 2-3%.

Source: Росбалт by

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